Asia markets fall as US-China tensions get worse; oil prices surge

On Monday, White House economic advisor Larry Kudlow said a trade deal between the U.S. and China is not "imminent."

Trade tensions between Washington and Beijing appear to have spilled over into other aspects of their relationship, with a planned visit by Defense Secretary James Mattis to China in October being canceled.

Asia markets were largely negative on Tuesday, as ties between the U.S. and China appeared to have taken a turn for the worse.

Down Under, the ASX 200 ended the trading day lower by 0.75 percent at 6,126.2.

Earlier on Tuesday, the Australian Competition and Consumer Commission said an inquiry into price competition among suppliers of foreign currency conversion services had been opened. It said it would be "examining why major companies in Australia, including the Big Four banks, seem to be able to consistently charge high prices."

Hong Kong's Hang Seng index continued to decline in the afternoon. As of 3:19 p.m. HK/SIN, the index slid 2.36 percent on its first trading day of the week after returning from a public holiday.

Over in Japan, however, the bucked the overall trend to close higher by 0.1 percent at 24,270.62, while the Topix also advanced by 0.33 percent at 1,824.03.

China's markets were closed for a public holiday.

Reserve Bank of Australia keeps rates on hold

On Tuesday afternoon. the Reserve Bank of Australia announced that it was going to continue keeping the cash rate unchanged at 1.50 percent, continuing a more than two-year streak.

"It's getting hard to come up with anything new to say on this!," Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in an afternoon note.

Oliver did, however, acknowledge that the Australian central bank's decision was "as it should be."

"Raising rates just to get rates back to more "normal levels", or so as to be able to cut them later if needed, would make no sense and would be bad for the economy," he said.

South Korea's job woes

On Tuesday morning, South Korea's Finance Minister Kim Dong-yeon warned that the country could see annual employment losses for the month of September, after the jobless rate hit an eight-year high in August.

Speaking with CNBC's "Squawk Box" on Tuesday, Standard Chartered Bank Korea's Head of Economic Research Park Chong Hoon said South Korea's employment woes were "structural" in nature, with issues such as a change in demographics and the retirement of baby boomers.

Asia-Pacific Market Indexes Chart

Trade developments

The market moves stateside came on the back of Canada and the U.S. announcing a new trade deal to replace the current North American Free Trade Agreement (NAFTA). The new accord is expected to be named the United States-Mexico-Canada Agreement. Leaders from the two countries, along with Mexico — which agreed to a deal with the U.S. in August — are expected to sign the new deal before the end of November, before it is handed to Congress.

Meanwhile, White House economic advisor Larry Kudlow said in a Fox Business interview on Monday that a trade deal with China is not "imminent." Kudlow also said U.S. President Donald Trump was not satisfied with the current progress of trade talks between Washington and Beijing.